TRIGYN TECHNOLOGIES LTD, MUMBAI V. ITO 8(3)(3), MUMBAI

ITA 1088/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2854 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEKI A PERAM PURNA
• Keywords: Transfer pricing; Double taxation relief; Principle of natural justice; Additional evidence
• Section: 43B; 143(3); 14A; 37(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL K BE NCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER, / I .TA NO.1088/MUM/2015 ( / ASSESSMENT YEAR: M/S. TRIGYN TECHNOLOGIES LTD., UNIT 27A, SDF-1, SEEPZ, ANDHERI (E), MUMBAI-400 096 / VS. THE ITO, 8(3)(3), MUMBAI ./ ./ PAN/GIR NO. AAACL 2065K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VIJAY MEHTA / RESPONDENT BY: SHRI VIVEKI A. PERAM PURNA / DATE OF HEARING :18.04.2016 ! / DATE OF PRONOUNCEMENT :22.06.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE LD. CIT(A)-58, MUMBAI DATED 23.12.2014 PERTAINING TO A SSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFI CER WHILE COMPLETING THE ASSESSMENT U/ S. 143(3) R.W.S. 144C OF THE ACT, WHICH IS ILLEGAL AND BAD IN LAW. ITA NO. 1088/M/2015 2 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER ON ACCOUNT OF TRANSFER PRICE ADJUSTMENT OF RS. 95,83,8 46/- ON ACCOUNT OF INTEREST ON REIMBURSEMENT AMOUNT DUE FRO M THE ASSOCIATE ENTERPRISE OF THE APPELLANT, NAMELY, M/ S. TRIGYN TECHNOLOGIES INC. 3. THE LEARNED CIT(A) HAS ERRED IN NOT DIRECTING TH E ASSESSING OFFICER TO ADOPT LIBOR RATE AS AGAINST CONFIRMING THE PLR RATE OF INTEREST APPLIED BY SBI @12.50% WITH FURTHER ENHANCEMENT OF 3% AS RISK ADJUSTMENT PREMIUM FOR THE PURPOSE OF MAKING TRANSF ER PRICING ADJUSTMENT OF RS.95,83,846/ - . 4.THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER U/ S. 37(1) OF THE ACT AMOUNTING TO RS. 55,57,000/- REPRESENTING THE EXPENDITURE INCURRED BY THE APPELL ANT UNDER THE HEAD 'CONSULTANCY CHARGES' AND PAID TO M/ S. TRIGYN TECHNOLOGIES INC - USA IC. 5. THE LEARNED CIT(A) HAS ERRED IN REJECTING THE CO NTENTION OF THE APPELLANT THAT PROVISIONS OF SECTION 40(A)(I A) OF THE ACT ARE NOT APPLICABLE FOR CONSULTANCY CHARGES OF RS.55,57,OOO / - PAID TO M/ S. TRIGYN TECHNOLOGIES INC - USA IC. 6. THE LEARNED CIT(A) ERRED IN NOT HOLDING THAT IN VIEW OF ARTICLE 23 OF INDIA-USA DTAA PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE FOR CONSULT ANCY CHARGES PAID TO M/ S. TRIGYN TECHNOLOGIES INC - USA IC. 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE FOLLOWING DISALLOWANCES MADE BY THE ASSESSING OFFICER U/ S. 40(A)(IA) OF THE ACT: A. RS. 7,75,265/- BEING THE RENT PAID TO SEEPZ; B. RS. 15,000/- OUT OF THE TOTAL AMOUNT OF RS. 36,0 00/- PAID TO SHRI PANNA JAYDEEP SAMPAT, BEING LEGAL AND PROFESSIONAL FEE; ITA NO. 1088/M/2015 3 AND C. RS. 44,759/- PAID TO E- VECTOR, BEING LEGAL EXPE NSES. 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS. 1,000/- MADE BY THE ASSESSING OFFICER, BEING PAYMENT MADE BY THE APPELL ANT TO THE COMPANY LAW BOARD U/ S. 37(1) OF THE ACT TREATI NG IT AS EXPENDITURE INCURRED BY WAY OF PENALTY OR FINE F OR VIOLATION OF LAW FOR THE TIME BEING IN FORCE. 9. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 64,1171- MADE BY THE ASSESSING OFFICER UL S. 14A R.W. RULE 8D OF THE LT. RULES. 10. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE DISALLOWANCE OF RS. 37,98,6961- MADE BY THE ASSESSING OFFICER U/ S. 43 B OF THE ACT. 11. THE LEARNED CIT(A) HAS ERRED IN NOT ACCEPTING T HE CRUCIAL ADDITIONAL EVIDENCES FILED BEFORE HIM. 12. THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW AN D IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE IS NOT PRESSING GROUND NO.1, HENCE GROUND N O. 1 IS DISMISSED AS NOT PRESSED. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT G ROUND NO. 2 & 3 RELATES TO TRANSFER PRICING ADJUSTMENT ON ACCOUNT O F INTEREST ON REIMBURSEMENT AMOUNT DUE FROM THE ASSOCIATE ENTERPR ISE OF THE ASSESSEE. GROUND NO.4 TO 6 RELATES TO THE DISALLOWA NCE OF EXPENDITURE INCURRED BY THE ASSESSEE UNDER THE HEAD CONSULTANC Y CHARGES PAID TO M/S. TRIGYN TECHNOLOGIES INC-USA IC. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE FILED AD DITIONAL EVIDENCES IN RESPECT OF THESE GROUNDS SINCE THESE EVIDENCES COULD NOT BE ITA NO. 1088/M/2015 4 FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS. H E FURTHER SUBMITS THAT SINCE THE ADDITIONAL EVIDENCES ARE GOING TO TH E ROOT OF THE MATTER HE PRAYS THAT THE MATTER MAY BE SENT BACK TO THE F ILE OF ASSESSING OFFICER FOR CONSIDERING THE ADDITIONAL EVIDENCES FU RNISHED. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO P AGE-30 OF THE PAPER BOOK AND SUBMITS THAT THE CO-ORDINATE BENCH FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 220/M/2013 DATED 9.4.2014 O N IDENTICAL ISSUES ADMITTED THE ADDITIONAL EVIDENCES AND RESTO RED THE ISSUES IN GROUND NO. 2 TO 6 TO THE ASSESSING OFFICER TO CONSI DER AFRESH IN ACCORDANCE WITH LAW. THEREFORE HE PRAYS THAT SIMIL AR DIRECTIONS BE ISSUED FOR THIS ASSESSMENT YEAR ALSO. THE LD. COUN SEL FOR THE ASSESSEE FURTHER SUBMITS THE REASON FOR NOT FURNISH ING THE EVIDENCES BEFORE THE ASSESSING OFFICER WAS THAT, THE HEAD OF FINANCE DEPARTMENT OF THE ASSESSEE-COMPANY TENDERED HIS R ESIGNATION AND HE WAS SERVING HIS NOTICE PERIOD AND THEREFORE IN T HE ABSENCE OF CFO, INCOME TAX MATTERS COULD NOT PROPERLY BE REPRESENTE D AND INFORMATION WAS NOT FURNISHED TO THE ASSESSING OFFI CER. 5. ON GOING THROUGH THE ORDER OF THE CO-ORDINATE BENCH OF THE EARLIER ASSESSMENT YEAR, WE FIND THAT ON IDENTICAL ISSUES, THE CO- ORDINATE BENCH RESTORED THE ADDITIONAL EVIDENCES TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THUS, THE ADDITION AL EVIDENCES FURNISHED BY THE ASSESSEE FOR THIS ASSESSMENT YEAR SHOULD GO BACK TO THE ASSESSING OFFICER FOR FRESH CONSIDERATION AND T HUS WE ADMIT THE ADDITIONAL EVIDENCES AND RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE ISSUES AFRES H IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE. ITA NO. 1088/M/2015 5 6. IN RESPECT OF GROUND NO. 10 I.E. CONFIRMING DISA LLOWANCE OF RS. 37,98,696/- MADE BY THE ASSESSING OFFICER U/S. 43B OF THE ACT, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS. 37,98,696/- PAID DURING THE YEAR U/S. 43B OF THE ACT. HOWEVER, THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT NO DOCUMENTARY EVIDENCES WERE FILED BY ASSESSE E TO SUPPORT THE CLAIM OF ASSESSEE. BEFORE THE LD. CIT(A), IT WAS S UBMITTED THAT THE ABOVE AMOUNT INCLUDES STATUTORY LIABILITIES OF EARL IER YEARS WHICH WERE PAID DURING THE PREVIOUS YEAR. IN ORDER TO SU PPORT THE CLAIM OF THE ASSESSEE, A CERTIFICATE OF CHARTERED ACCOUNTANT WAS ALSO FILED DURING THE COURSE OF APPELLATE PROCEEDINGS. THE CI T(A) HELD THAT THE CERTIFICATE OF CHARTERED ACCOUNTANT WAS NOT PRODUCE D BEFORE THE A.O. AND THE SAME IS IN THE NATURE OF ADDITIONAL EVIDENC E BEFORE HIM AND IT CANNOT BE ADMITTED. THE SAID CERTIFICATE IS PLACED AT PAGE NO. 61 OF PAPER BOOK. 7. TAKING THE SUBMISSIONS INTO CONSIDERATION, WE AR E OF THE CONSIDERED VIEW THAT THIS ISSUE ALSO SHOULD GO BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION BASED ON THE EVIDENC ES FURNISHED BY THE ASSESSEE. 8. IN RESPECT OF GROUND NOS. 7 TO 9 RELATING TO THE DISALLOWANCE U/S. 40(A)(IA) AND 14A, THE LD. COUNSEL FOR THE ASS ESSEE SUBMITS THAT THESE GROUNDS ALSO MAY BE SENT BACK TO THE ASSESSIN G OFFICER FOR FRESH ADJUDICATION. 9. WE FIND THAT THE GROUNDS RAISED WERE AGAINST DIS ALLOWANCE MADE U/S. 40(A)(IA) AND U/S. 14A R.W. RULE 8D ETC. NEEDS TO BE ITA NO. 1088/M/2015 6 CONSIDERED AFRESH BY THE ASSESSING OFFICER AFTER HE ARING THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE HAVE NO SERIOU S OBJECTION IN RESTORING ALL THE ISSUES TO THE FILE OF THE ASSESSI NG OFFICER FOR FRESH ADJUDICATION. THUS, WE RESTORE ALL THESE ISSUES TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH L AW. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JUNE, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 22 ND JUNE, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI